21 March 2016
TMT INVESTMENTS PLC
("TMT" or the "Company")
Final results for the year ended 31 December 2015
TMT Investments PLC, which invests in high-growth, internet-based companies across a variety of sectors, is pleased to announce its final results for the year ended 31 December 2015.
· NAV per share of US$1.91 (up 40% from US$1.36 as of 31 December 2014)
· 1 full (Tracks) and 1 partial (Pipedrive) cash exit
· 10 positive revaluations, including significant uplifts in values of our portfolio stars Backblaze, Depositphotos, LeTote, Pipedrive, Virool, and Wrike
· 2 write-downs (Unicell and Appsindep)
· US$1.43 million allocated to new and follow-on investments (Depositphotos, ScentBird, and Weaved)
· Diversified portfolio of 31 companies focused around mobile software applications, cloud solutions, social discovery shopping, and business SaaS tools
· Many portfolio companies continue to experience rapid growth
Alexander Selegenev, Executive Director of TMT, commented:
"2015 was our fifth full year as a publicly traded company. As reported in our 2014 Annual Report, given the rapid growth experienced by a significant number of our portfolio companies, we expected 2015 to produce a number of positive revaluations across our portfolio. We are delighted that this is exactly what happened: our NAV per share as of 31 December 2015 increased by 40% to US$1.91, despite two sizable write-downs. It is especially pleasing to see that a number of companies in which we invested at an earlier stage have attracted the attention of large, blue-chip investment groups at higher valuations in order to fund their continued growth.
We continue to see exciting investment opportunities in our chosen sectors and look forward to updating our shareholders on the Company's progress in the near future."
The Annual Report and Accounts for the year ended 31 December 2015 are available on the Company's website at www.tmtinvestments.com, where an electronic copy can be accessed.
For further information contact:
TMT Investments Plc Alexander Selegenev
|
+44 1534 281 843 alexander.selegenev@tmtinvestments.com
|
ZAI Corporate Finance Ltd. NOMAD Richard Morrison/ Peter Trevelyan-Clark/ Irina Lomova
|
+44 20 7060 2220 |
Hybridan LLP Broker Claire Louise Noyce
|
+44 20 3764 2341 |
Kinlan Communications David Hothersall
|
Tel. +44 20 7638 3435 |
EXECUTIVE DIRECTOR'S STATEMENT
2015 has been a successful year for the Company, with a big number of sizable revaluations across our portfolio. As a result, our NAV per share as of 31 December 2015 increased significantly to US$1.91 (up 40% from US$1.36 as of 31 December 2014). Importantly, this result takes into account two sizable impairments that were not triggered by any actual independent transactions, but which the management considered appropriate to recognise at this stage. TMT has now invested in 39 companies since its flotation in December 2010 and has a diversified portfolio of 31 investees focused primarily on mobile software applications, cloud solutions, social discovery shopping, and business SaaS tools.
Portfolio Performance
For the last few years we have noted the biggest "reporting challenge" faced by the Company, which is in the business of investing in earlier-stage, privately held companies that typically do not have a sufficiently long history of earnings. This means that, regardless of how impressively some of our portfolio companies may have grown in terms of revenue and operating metrics, positive changes in fair value of our portfolio companies cannot be justified under the IFRS rules unless there has been an independent equity financing round or other measurable reliable evidence to support a change in the valuation. On the other hand, any write-offs or impairments are recorded immediately as negative revenue on the Company's Profit and Loss Account. 2015 was an important year for the Company, as we were delighted to see a large number of significant positive portfolio revaluations among our portfolio companies. It is especially pleasing to see that a number of companies in which we invested at an earlier stage are now attracting the attention of large, blue chip investment groups at higher valuations to support their continued growth.
The following developments took place within the Company's portfolio in 2015:
Cash and part-cash exits:
· In September 2015, the Company's portfolio company Kanvas Labs, Inc. ("Kanvas") was acquired by AOL, Inc. TMT's total maximum potential consideration for the transaction (including amounts in escrow) is US$797,529, representing a premium of approximately US$247,000 (or 45%) to the value of TMT's original investment in Kanvas made in November 2011 and March 2013, or an internal rate of return ("IRR") of up to 11%.
· In November 2015, the Company sold a small part of its equity stake in Pipedrive, Inc. ("Pipedrive"), a SaaS-based sales CRM software provider, for US$249,490 in cash. (Please see further details of this transaction in the "Positive non-cash revaluations" section below.)
Positive non-cash revaluations:
· In February 2015, Drippler, a mobile tech discovery media service, completed a sizable equity financing round. The transaction represents an uplift of approximately US$97,000 (or 48%) in the fair value of TMT's investment in Drippler, compared to the amount announced as of 30 June 2014.
· In April 2015, Wrike, a SaaS-based work management platform, completed a US$15 million equity financing round. The transaction represents an approximately US$2.3 million (or 116%) uplift in the fair value of TMT's investment in Wrike, compared to the latest reported amount reported as of 31 December 2014.
· In April 2015, Pipedrive, a SaaS-based sales CRM software provider, completed a US$9 million equity financing round led by Bessemer Venture Partners. The transaction represents an approximately US$1.82 million (or 235%) uplift in the fair value of TMT's investment in Pipedrive, compared to the latest reported amount as of 31 December 2014.
· In May 2015, farm management software provider VitalFields completed a new equity financing round. The transaction represents an uplift of approximately US$36,000 (or 27%) in the fair value of TMT's investment in VitalFields, compared to the latest reported amount as of 31 December 2014.
· In June 2015, PandaDoc, a SaaS-based sales management tool, completed a US$5 million equity financing round. The transaction represents an uplift of approximately US$90,000 (or 22%) in the fair value of TMT's investment in PandaDoc, compared to the latest reported amount as of 31 December 2014.
· In September 2015, Drupe, a mobile app that brings all your contacts and communication apps together in one place, completed an equity financing round. The transaction represents an uplift of approximately US$0.3 million (or 132%) in the fair value of TMT's investment in Drupe, compared to the latest reported amount as of 31 December 2014.
· In October 2015, Virool, a native video advertising platform, completed a sizable equity financing round. The transaction represents an approximately US$1.31 million (or 161%) uplift in the fair value of TMT's investment in Virool, compared to the latest reported amount as of 31 December 2014.
· In November 2015, the Company sold a small part of its equity stake in Pipedrive, Inc. ("Pipedrive"), a SaaS-based sales CRM software provider. The transaction represents a further US$751,212 (or 29%) uplift in the fair value of TMT's investment in Pipedrive, compared to the amount announced as of 30 June 2015. TMT's cash consideration received pursuant to the transaction is US$249,490. The Company's remaining equity stake in Pipedrive is worth approximately US$3.1m, which represents a further US$0.5m uplift compared to the previous valuation announced as of 30 June 2015.
· In December 2015, LeTote, a Netflix-style fashion rental platform, completed a US$15 million equity financing round. The transaction represents an uplift of approximately US$0.62 million (or 137%) in the fair value of TMT's investment in LeTote, compared to the latest reported amount as of 31 December 2014.
· In December 2015, Depositphotos, a stock photo marketplace, completed a US$5 million equity financing round, led by the venture capital arm of the European Bank for Reconstruction and Development ("EBRD"). The transaction represents an uplift of approximately US$8.12 million (or 163%) in the fair value of TMT's investment in Depositphotos, compared to the latest reported amount as of 31 December 2014.
· Based on the results of an independent valuation report commissioned by Backblaze, Inc. ("Backblaze"), the fair value of TMT's equity stake in Backblaze has increased by approximately US$3.4 million (or 55%), compared to the amount reported as of 31 December 2014.
Impairments and write-offs:
· The Board of TMT considers it prudent to incur an impairment charge equal to US$1,527,383, or 51.2% of the fair value of the Company's investment in Unicell. Unicell's traditional business has reduced significantly in the last two years, and the company is quite leveraged. On the other hand, Unicell's 50% equity stake in Pango, a successful and fast-growing parking payment operator in Israel, has become more valuable. The combined valuation produces the fair value of TMT's stake in Unicell of US$1,455,088, compared to US$2,982,471 reported as of 31 December 2014.
· Online games developer AppsIndep, in which TMT invested in 2012, has experienced difficulties in gaining satisfactory traction for games launched in the last two years. Accordingly, the Board of TMT considers it prudent to incur an impairment charge equal to US$1,397,764, or 75% of the fair value of the Company's investment in AppsIndep reported as of 31 December 2014.
Key developments for the 10 largest portfolio holdings in 2015 (compared to 2014; source: TMT's portfolio companies)
Depositphotos (photobank):
· Revenues up 21%
· Total number of files in the photobank up 45%
· $5m new equity raised, with EBRD leading the round
Backblaze (online data backup and cloud storage provider):
· Revenues up 25%
· Total number of licensed computers up 30%
· Launched "B2": a new low-cost commercial cloud storage product (direct competitor of Amazon's S3).
Wanelo (online social shopping platform):
· Revenues up 311%
· Total subscribers up 19%
· Over 550,000 stores and 30 million products on the platform
Wrike (work management and collaboration software):
· Revenues up 131%
· Total number of paid accounts up 55%
· $15m new equity raised from Scale Venture Partners
Pipedrive (sales CRM software):
· Revenues up 116%
· Total paying customers up 84%
· $9m new equity raised from Bessemer Ventures
Adinch (online advertising platform):
· Revenues up 24%
· Russian part of the business negatively affected by the financial crisis
Virool (native video advertising platform):
· Sizable new equity round completed
· Significant growth in new clients and revenues
Unicell (provider of digital marketing solutions and mobile applications and services):
· Traditional business is not growing
· Generally breakeven, but quite leveraged
· 50%-owned Pango, a parking payment operator in Israel, is fast-growing and successfully developing
LeTote (Netflix-style fashion rental platform):
· Revenues up more than 400%
· $15m new equity raised
Anews (news reading app):
· Total app downloads up 33% to over 3.5m
· Revenues up 56%
New investments
In 2015 the Company invested US$400,000 in fragrance subscription service ScentBird, as well as made additional investments in two existing portfolio companies (US$1,000,000 in Depositphotos and US$27,000 in Weaved).
NAV per share
The Company's net asset value per share as of 31 December 2015 increased to US$1.91 (31 December 2014: US$1.36).
Operating Expenses
In 2015, the Company's Administrative Expenses of US$997,705 were notably below the 2014 levels (US$1,382,874). This is generally attributed to the Company's less intensive investment activities in 2015. Total Operating Expenses also decreased in the reporting period due to the lower share-based option charge of US$45,028 (2014: US$166,282). This is a non-cash item resulting from the Company's share option program adopted in October 2012.
Financial position
As of 31 December 2015, the Company had US$1.16 million in cash reserves. As of the date of this report, the Company has no debt and approximately US$0.95 million in cash reserves.
Events after the reporting period
There were no material events subsequent to the end of the reporting period.
Amendment to the Investing Policy
We propose to seek shareholder consent to amend the Company's existing Investing Policy by replacing the intention to acquire blocking stakes in private companies. Whilst the acquisition of lower than blocking stakes is permitted, the Investing Policy stated that this would be done "where it (the Company) sees ways to increase the stakes to blocking or controlling stakes at a later date." At the current time, this may not be feasible or desirable, and so shareholders will be asked to approve the following amendment to the existing Investing Policy:
Private Companies
The Company will target small and mid-sized companies and will seek to secure at least significant blocking stakes and board representation, where it considers that the Company and/or an investee company would benefit from such an appointment. The Company will consider making equity investments in lower than blocking stakes only where it sees ways to increase the stakes to blocking or controlling stakes at a later date…
The remainder of the Investing Policy remains unchanged.
Outlook
2015 was our fifth full year as a publicly traded company. As reported in our 2014 Annual Report, given the rapid growth experienced by a significant number of our portfolio companies, we expected 2015 to produce a number of positive revaluations across our portfolio. We are delighted that this is exactly what happened: our NAV per share as of 31 December 2015 increased by 40% to US$1.91, despite two sizable write-downs. It is especially pleasing to see that a number of companies in which we invested at an earlier stage have attracted the attention of large, blue-chip investment groups at higher valuations in order to fund their continued growth.
We continue to see exciting investment opportunities in our chosen sectors and look forward to updating our shareholders on the Company's progress in the near future.
Alexander Selegenev
Executive Director
Statement of Comprehensive Income
|
|
For the year ended 31/12/2015 |
|
For the year ended 31/12/2014 |
|
|
Notes |
USD |
|
USD |
|
Losses on investments |
3 |
(2,215,983) |
|
(23,911) |
|
|
|
(2,215,983) |
|
(23,911) |
|
Expenses Share-based payment charge |
15 |
(45,028) |
|
(166,282) |
|
Administrative expenses |
5 |
(997,705) |
|
(1,382,874) |
|
Operating loss |
|
(3,258,716) |
|
(1,573,067) |
|
Net finance income |
7 |
7,964 |
|
11,079 |
|
Loss before taxation |
|
(3,250,752) |
|
(1,561,988) |
|
Taxation |
8 |
- |
|
- |
|
Loss attributable to equity shareholders |
|
(3,250,752) |
|
(1,561,988) |
|
Other comprehensive income for the year: |
|
|
|
|
|
Change in fair value of available-for-sale financial assets |
16 |
18,505,974 |
|
2,171,251 |
|
Total comprehensive income for the year |
|
15,255,222 |
|
609,263 |
|
Loss per share |
|
|
|
|
|
Basic and diluted loss per share (cents per share) |
9 |
(11.75) |
|
(5.96) |
|
Statement of Financial Position
|
|
At 31 December 2015 USD |
|
At 31 December 2014 USD |
||
|
Notes |
|
|
|
||
Non-current assets |
|
|
|
|
||
Investments in equity shares |
10 |
49,483,857 |
|
31,854,151 |
||
Convertible loan notes receivable |
10 |
2,202,649 |
|
3,091,702 |
||
Total non-current assets |
|
51,686,506 |
|
34,945,853 |
||
|
|
|
|
|
||
Current assets |
|
|
|
|
||
Trade and other receivables |
11 |
178,640 |
|
159,784 |
||
Cash and cash equivalents |
12 |
1,159,789 |
|
2,639,070 |
||
Total current assets |
|
1,338,429 |
|
2,798,854 |
||
Total assets |
|
53,024,935 |
|
37,744,707 |
||
|
|
|
|
|
||
Current liabilities |
|
|
|
|
||
Trade and other payables |
13 |
39,377 |
|
59,399 |
||
Total liabilities |
|
39,377 |
|
59,399 |
||
|
|
|
|
|
||
Net assets |
|
52,985,558 |
|
37,685,308 |
||
|
|
|
|
|
||
Equity |
|
|
|
|
||
Share capital |
14 |
31,453,510 |
|
31,453,510 |
||
Share-based payment reserve |
16 |
165,454 |
|
392,659 |
||
Fair value reserve |
16 |
28,614,592 |
|
10,108,618 |
||
Retained losses |
16 |
(7,247,998) |
|
(4,269,479) |
||
Total equity |
|
52,985,558 |
|
37,685,308 |
||
Statement of Cash Flows
|
|
For the year ended 31/12/2015 |
For the year ended 31/12/2014 |
|
|
|
|
USD |
USD |
|
|
|
Notes |
|
|
|
|
Operating activities |
|
|
|
|
|
Operating loss |
|
(3,258,716) |
(1,573,067) |
|
|
Adjustments for non-cash items: |
|
|
|
|
|
Profit on disposal of available-for-sale assets |
3 |
(645,387) |
(355,010) |
|
|
Gain on conversion of loan notes to equity |
|
- |
(2,221) |
|
|
Impairment of available-for-sale assets and accrued interest |
3 |
2,937,509 |
451,482 |
|
|
Employee salaries settled by issue of shares |
14 |
- |
300,000 |
|
|
Share-based payment charge |
15 |
45,028 |
166,282 |
|
|
Amortized costs of convertible notes receivable |
3 |
6,533 |
14,036 |
|
|
|
|
(915,033) |
(998,498) |
|
|
Changes in working capital: |
|
|
|
|
|
(Increase)/decrease in trade and other receivables |
11 |
(18,856) |
(80,252) |
|
|
Decrease in trade and other payables |
13 |
(20,022) |
(36,609) |
|
|
Net cash used by operating activities |
|
(953,911) |
(1,115,359) |
|
|
Investing activities |
|
|
|
|
|
Interest received |
7 |
7,964 |
11,079 |
|
|
Purchase of available-for-sale assets |
10 |
(1,561,762) |
(4,370,612) |
|
|
Proceeds from sale of available-for-sale assets |
|
1,028,428 |
613,362 |
|
|
Net cash used by investing activities |
|
(525,370) |
(3,746,171) |
|
|
Financing activities |
|
|
|
|
|
Cash proceeds from issue of shares |
14 |
- |
4,258,331 |
|
|
Net cash from financing activities |
|
- |
4,258,331 |
|
|
Decrease in cash and cash equivalents |
|
(1,479,281) |
(603,199) |
|
|
Cash and cash equivalents at the beginning of the year |
|
2,639,070 |
3,242,269 |
|
|
Cash and cash equivalents at the end of the year |
12 |
1,159,789 |
2,639,070 |
|
|
Statement of Changes in Equity
For the year ended 31 December 2014 and for year ended 31 December 2015, USD
|
|
Share capital |
|
Share-based payment reserve |
Fair value reserve |
Retained losses |
|
Total |
|
|
|||||||
|
Notes |
USD |
|
USD |
USD |
USD |
|
USD |
Balance at 1 January 2014 |
|
26,895,179 |
|
695,970 |
7,937,367 |
(3,177,084) |
|
32,351,432 |
Total comprehensive income/(loss) for the year |
|
- |
|
- |
2,171,251 |
(1,561,988) |
|
609,263 |
Issue of shares |
14 |
4,558,331 |
|
- |
- |
- |
|
4,558,331 |
Buy back and cancellation of shares |
|
- |
|
- |
- |
- |
|
- |
Share-based payment charge |
15 |
- |
|
166,282 |
- |
- |
|
166,282 |
Lapse of share options |
15 |
- |
|
(469,593) |
- |
469,593 |
|
- |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2014 |
|
31,453,510 |
|
392,659 |
10,108,618 |
(4,269,479) |
|
37,685,308 |
Total comprehensive income/(loss) for the year |
|
- |
|
- |
18,505,974 |
(3,250,752) |
|
15,255,222
|
Issue of shares |
14 |
- |
|
- |
- |
- |
|
- |
Share-based payment charge |
15 |
- |
|
45,028 |
- |
- |
|
45,028 |
Transfers on exercise / lapse of share options |
15 |
- |
|
(272,233) |
- |
272,233 |
|
- |
Balance at 31 December 2015 |
|
31,453,510 |
|
165,454 |
28,614,592 |
(7,247,998) |
|
52,985,558 |
|
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015
1. Company information
TMT Investments Plc ("TMT" or the "Company") is a company incorporated in Jersey with its registered office at Queensway House, Hilgrove Street, St Helier, JE1 1ES, Channel Islands.
The Company was incorporated and registered on 30 September 2010 in Jersey under the Companies (Jersey) Law 1991 with registration number 106628 under the name TMT Investments Limited. The Company obtained consent from the Jersey Financial Services Commission pursuant to the Control of Borrowing (Jersey) Order 1985 on 30 September 2010. On 1 December 2010 the Company re-registered as a public company and changed its name to TMT Investments PLC.
The memorandum and articles of association of the Company do not restrict its activities and therefore it has unlimited legal capacity. The Company's ability to implement its Investing Policy and achieve its desired returns will be limited by its ability to identify and acquire suitable investments. Suitable investment opportunities may not always be readily available.
The Company will seek to make investments in any region of the world.
Financial statements of the Company are prepared by and approved by the Directors in accordance with International Financial Reporting Standards, International Accounting Standards and their interpretations issued or adopted by the International Accounting Standards Board as adopted by the European Union ("IFRSs"). The Company's accounting reference date is 31 December.
2. Summary of significant accounting policies
2.1 Basis of presentation
The principal accounting policies applied by the Company in the preparation of these financial statements are set out below and have been applied consistently.
The financial statements have been prepared on a going concern basis, under the historical cost basis as modified by the fair value of available-for-sale financial assets, as explained in the accounting policies below, and in accordance with IFRS. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
2.2 Going concern
The Directors confirm that, after giving due consideration to the financial position and expected cash flows of the Company; they have a reasonable expectation that the Company will have adequate cash resources to continue in operational existence for the foreseeable future, and for at least one year from the date of approval of these financial statements and they have therefore adopted the going concern basis in preparing the financial statements.
2.3 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker who is responsible for allocating resources and assessing performance of the operating segments and which has been identified as the Board of Directors that make strategic decisions. For the purposes of IFRS 8 'Operating Segments' the Company currently has one segment, being 'Investing in the TMT sector'.
Even though the Company only has one segment, there are still geographical disclosures that need to be made to comply with IFRS 8 'Operating Segments'.
The Company analyses revenue and non-current financial assets according to the geographical location of the investment (see note 4).
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of the Company are measured in United States Dollars ('US dollars', 'USD' or 'US$'), which is the Company's functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into US$ using the exchange rates prevailing at the dates of the transactions. Exchange differences arising from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.
Conversation rates, USD |
||||||
Currency |
|
|
|
|
At 31.12.2015 |
Average rate, 2015 |
British pounds, £ |
|
|
|
|
1.4819 |
1.5262 |
Euro, € |
|
|
|
|
1.0934 |
1.0167 |
2.5 Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand, deposits held at call with banks, bank overdrafts and other short-term highly liquid investments with maturities of three months or less from the date of acquisition.
2.6 Financial assets
Recognition and measurement
Investments are recognized and de-recognized on a date where the purchase or sale of an investment is under a contract whose terms require the delivery or settlement of the investment. The Company manages its investments with a view to profiting from the receipt of dividends and changes in fair value of equity investments.
"Available-for-sale" financial instruments include unlisted equity investments and convertible promissory loan notes. Equity instruments classified as available-for-sale are those which are neither classified as held-for-trading nor designated as fair value through profit or loss. Convertible promissory loan notes are treated as similar in nature to the unlisted equity investments and designated as available-for-sale.
Available-for-sale investments are carried at fair values except for financial assets that do not have a quoted market price in an active market and whose fair value cannot be reliably measured which are measured at cost less any identified impairment losses at the end of the period in accordance with the IAS 39 para 46 (c) exemptions. Fair value information has therefore not been disclosed for those investments.
Where there has been a relevant transaction during the year that gives an indication of the fair value of the available-for-sale unlisted shares, the shares are included at that fair value and the increase or decrease in fair value is recognised in the investment fair value reserve. The "price of recent investment" methodology is used mainly for investments in venture capital companies and includes cost of investment or valuation by reference to a subsequent financing round. Valuation increases above cost are only recognised if that round involved a new external investor and the company is meeting milestones set by investors.
Investments are classified on recognition as "fair value through profit and loss" when their fair values can be estimated reliably on a regular basis and when they are managed on a fair value basis. Fair value changes of investments at fair value through profit and loss are included within profit/loss in the income statement. At 31 December 2015 all investments are classified as "available-for-sale" and none are classified as "fair value through profit and loss".
Financial assets that qualify as an associate as 20% or more of the voting rights are held by the company, are exempt from IAS 28 'Investments in Associates', as TMT Investments plc is a venture capital organisation. Such investments are therefore treated as available-for-sale financial assets.
Income
Interest income from convertible notes receivable is recognized as it accrues by reference to the principal outstanding and the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash flows through the expected life of the financial asset to the asset's carrying value.
Impairment of available-for-sale financial assets
A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. In the case of available for sale assets, a significant or prolonged decline in the fair value of the financial asset below its cost is considered an indicator that the financial assets are impaired.
If objective evidence indicates that financial assets that are carried at cost need to be tested for impairment, calculations are based on information derived from business plans and other information available for estimating their fair value. Any impairment loss is included in profit/loss for the year in the Statement of Comprehensive Income.
2.7 Net finance income
Net finance income comprises interest income on deposits. Interest income is recognized as it accrues in the statement of comprehensive income, using the effective interest method. Finance costs comprise interest expenses on borrowings and the unwinding of the discount on provisions.
2.8 Taxation
Deferred tax is provided in full using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates that are expected to apply when the related deferred tax asset is realised or when the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
2.9 Equity instruments
Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.
2.10 Share-based payments
The fair value of options granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest. For equity settled share-based payment transactions other than transactions with employees the Company measures the goods or services received at their fair value, unless that fair value cannot be estimated reliably. If this is the case the Company measures their fair values and the corresponding increase in equity, indirectly, by reference to the fair value of equity instruments granted.
The Company enters into arrangements that are equity-settled share-based payments with certain employees. These are measured at fair value at the date of grant, which is then recognized in the statement of comprehensive income on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest. Fair value is measured by use of an appropriate model. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of TMT Investments. The charge is adjusted at each year end date to reflect the actual number of forfeitures, cancellations and leavers during the period. The movement in cumulative charges since the previous year end is recognized in the statement of comprehensive income, with a corresponding entry in equity.
2.11 New IFRSs and interpretations not applied
The IASB has issued the following standards and interpretations which have been endorsed by the European Union to be applied to financial statements with periods commencing on or after the following dates:
|
Effective for period beginning on or after |
|
IFRS 9 |
Financial Instruments |
1 January 2018 |
IFRS 15 |
Revenue from Contracts with Customers |
1 January 2017 |
The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the financial statements in the period of initial application and have decided not to adopt any of them early.
2.12 Accounting estimates and judgements
Estimates and judgements need to be regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates significant to the financial statements during the year and at the year-end is the consideration of the fair value of available-for-sale assets, the impairment of available-for-sale assets and share-based payment calculations, as set out in the relevant accounting policies shown above. A number of the available-for-sale financial assets held by the Company are at an early stage of their development. The Company cannot yet carry out regular reliable fair value estimates of some of these investments. Future events or transactions involving the companies invested in may result in more accurate valuations of their fair values (either upwards or downwards) which may affect the Company's overall net asset value.
3 Losses on investments
|
For the year ended 31/12/2015 |
|
For the year ended 31/12/2014 |
|
USD |
|
USD |
Gross interest income from convertible notes receivable |
82,672 |
|
86,597 |
Amortized costs of convertible notes receivable |
(6,533) |
|
(14,036) |
Net interest income from convertible notes receivable |
76,139 |
|
72,561 |
Profit on disposal of equity investments |
645,387 |
|
251,388 |
Profit on disposal of convertible notes |
- |
|
103,622 |
Impairment of available-for-sale assets |
(2,937,509) |
|
(451,482) |
Total net losses on investments |
(2,215,983) |
|
(23,911) |
4 Segmental analysis
Geographic information
The Company has investments in six principal geographical areas - USA, Israel, BVI, Cyprus, Estonia and Russia.
Non-current financial assets
As at 31/12/2015
|
USA |
Israel |
BVI |
Cyprus |
Estonia |
Russia |
Total |
|
USD |
USD |
USD |
USD |
USD |
USD |
USD |
Equity investments |
45,507,167 |
2,973,369 |
305,050 |
465,921 |
173,254 |
59,096 |
49,483,857 |
Convertible notes |
2,202,649 |
- |
- |
- |
- |
- |
2,202,649 |
Total |
47,709,816 |
2,973,369 |
305,050 |
465,921 |
173,254 |
59,096 |
51,686,506 |
As at 31/12/2014
|
USA |
Israel |
BVI |
Cyprus |
Estonia |
Russia |
Total |
|
USD |
USD |
USD |
USD |
USD |
USD |
USD |
Equity investments |
25,490,710 |
3,806,652 |
305,050 |
1,863,685 |
328,958 |
59,096 |
31,854,151 |
Convertible notes |
2,954,852 |
- |
- |
- |
136,850 |
- |
3,091,702 |
Total |
28,445,562 |
3,806,652 |
305,050 |
1,863,685 |
465,808 |
59,096 |
34,945,853 |
5 Administrative expenses
Administrative expenses include the following amounts:
|
For the year ended 31/12/2015 |
|
For the year ended 31/12/2014 |
|
USD |
|
USD |
Staff expenses (note 6) |
595,511 |
|
796,309 |
Professional fees |
128,583 |
|
173,963 |
Legal fees |
26,342 |
|
27,266 |
Bank and LSE charges |
20,577 |
|
24,412 |
Audit and accounting fees |
43,489 |
|
49,837 |
Rent |
91,384 |
|
172,608 |
Other expenses |
83,108 |
|
119,717 |
Currency exchange loss |
8,711 |
|
18,762 |
|
997,705 |
|
1,382,874 |
6 Staff expenses
|
For the year ended 31/12/2015 |
|
For the year ended 31/12/2014 |
|
USD |
|
USD |
Directors' fees |
199,031 |
|
356,269 |
Wages and salaries |
396,480 |
|
440,040 |
|
595,511 |
|
796,309 |
Wages and salaries shown above include salaries and bonuses relating to 2015. These costs are included in administrative expenses. In addition to the above, there are employment expenses for share-based payments of US$45,028 (for the year ended 31 December 2014: US$166,282).
The average number of staff employed (excluding Directors) by the Company during the year was 5 (2014: 5).
The Directors' fees for 2015 were as follows:
|
For the year ended 31/12/2015 |
|
For the year ended 31/12/2014 |
|
USD |
|
USD |
Alexander Selegenev |
108,475 |
|
186,826 |
Yuri Mostovoy |
50,000 |
|
115,500 |
James Joseph Mullins |
30,556 |
|
32,912 |
Petr Lanin |
10,000 |
|
21,031 |
|
199,031 |
|
356,269 |
The Directors' fees shown above are all classified as 'short term employment benefits' under International Accounting Standard 24. The Directors do not receive any pension contributions or other benefits.
Key management personnel of the Company are defined as those persons having authority and responsibility for the planning, directing and controlling the activities of the Company, directly or indirectly. Key management of the Company are therefore considered to be the Directors of the Company. There were no transactions with the key management, other than their Directors fees and share options.
7 Net finance income
|
For the year ended 31/12/2015 |
|
For the year ended 31/12/2014 |
|
USD |
|
USD |
Interest income |
7,964 |
|
11,079 |
|
7,964 |
|
11,079 |
8 Income tax expense
|
For the year ended 31/12/2015 |
|
For the year ended 31/12/2014 |
|
USD |
|
USD |
Current taxes |
|
|
|
Current year |
- |
|
- |
Deferred taxes |
|
|
|
Deferred income taxes |
- |
|
- |
|
- |
|
- |
The Company is incorporated in Jersey. No tax reconciliation note has been presented as the income tax rate for Jersey companies is 0%.
9 Loss per share
The calculation of basic loss per share is based upon the net loss for the year ended 31 December 2015 attributable to the ordinary shareholders of US$3,258,716 (2014: net loss of US$1,561,988) and the weighted average number of ordinary shares outstanding calculated as follows:
Loss per share |
For the year ended 31/12/2015 |
|
For the year ended 31/12/2014 |
Basic loss per share (cents per share) |
(11.75) |
|
(5.96) |
Loss attributable to equity holders of the entity |
(3,258,716) |
|
(1,561,988) |
The weighted average number of ordinary shares outstanding before and after adjustment for the effects of all dilutive potential ordinary shares calculated as follows:
|
|
|
|
(in number of shares weighted during the year outstanding) |
For the year ended 31/12/2015 |
|
For the year ended 31/12/2014 |
Weighted average number of shares in issue |
|
|
|
Ordinary shares |
27,744,962 |
|
26,199,590 |
|
27,744,962 |
|
26,199,590 |
Effect of dilutive potential ordinary shares |
|
|
|
Share options |
(21,099) |
|
1,004,720 |
Weighted average of shares for the year (fully diluted) |
27,723,863 |
|
27,204,310 |
The diluted loss per share for both 2015 and 2014 is kept the same as the basic loss per share because the conversion of the share options decreases the basic loss per share and is therefore anti-dilutive.
10 Non-current financial assets
|
At 31 December 2015 |
|
At 31 December 2014 |
Available-for-sale financial assets, USD: |
|
|
|
Investments in equity shares (i) |
|
|
|
- unlisted shares |
49,483,857 |
|
31,854,151 |
Convertible notes receivable (ii) |
|
|
|
- promissory notes |
2,202,649 |
|
3,091,702 |
|
51,686,506 |
|
34,945,853 |
Reconciliation of fair value measurements of non-current financial assets:
|
|
Available-for-sale |
|
Total |
||
|
|
Unlisted |
|
Convertible |
|
|
|
|
USD |
|
USD |
|
USD |
Balance as at 1 January 2014 |
|
26,932,335 |
|
2,193,304 |
|
29,125,639 |
Total gains or losses in 2014: |
|
|
|
|
|
|
- in profit or loss - impairment |
|
(451,482) |
|
- |
|
(451,482) |
- in other comprehensive income |
|
2,171,251 |
|
- |
|
2,171,251 |
Purchases (including consulting & legal fees) |
|
3,074,752 |
|
1,295,860 |
|
4,370,612 |
Disposal of investment (carrying value) |
|
(258,352) |
|
(14,036) |
|
(272,388) |
Conversion of notes to equity and net gain |
|
385,647 |
|
(383,426) |
|
2,221 |
Balance as at 31 December 2014 |
|
31,854,151 |
|
3,091,702 |
|
34,945,853 |
Total gains or losses in 2015: |
|
|
|
|
|
|
- in profit or loss - impairment |
|
(2,292,123) |
|
- |
|
(2,292,123) |
- in other comprehensive income |
|
18,505,974 |
|
- |
|
18,505,974 |
Purchases (including consulting & legal fees) |
|
1,060,745 |
|
501,018 |
|
1,561,763 |
Disposal of investment (carrying value) |
|
(1,028,428) |
|
(6,533) |
|
(1,034,961) |
Conversion and other movements |
|
1,383,538 |
|
(1,383,538) |
|
- |
Balance as at 31 December 2015 |
|
49,483,857 |
|
2,202,649 |
|
51,686,506 |
Available-for-sale investments are carried at fair values. Where financial assets do not have a quoted market price in an active market and their fair values cannot be reliably measured they are measured at cost less any identified impairment losses at the end of reporting period, in accordance with IAS 39 para 46 (c) exemption.
Where there has been a relevant transaction during the year that gives an indication of the fair value of the unlisted shares, the shares are included at that fair value and the increase or decrease in fair value is recognised in the fair value reserve. The "price of recent investment" methodology is used mainly for investments in venture capital companies and includes cost of investment or valuation by reference to a subsequent financing round. Valuation increases above cost are only recognised if that round involved a new external investor and the company is meeting milestones set by investor.
(i) Equity investments as at 31 December 2015:
Investee company |
Date of initial investment |
Value at 1 Jan 2015, USD |
Additions to equity investments during the period, USD |
Conversions from loan notes, USD |
Gain/loss from changes in fair value of equity investments, USD |
Profit/ Impairment charge, USD |
Disposals, USD |
Value at 31 Dec 2015, USD |
Equity stake owned |
||
Unicell |
15.09.2011 |
2,982,471 |
- |
- |
- |
(1,527,383) |
- |
1,455,088 |
10.00% |
||
DepositPhotos |
26.07.2011 |
4,997,285 |
999,995 |
- |
8,121,753 |
- |
- |
14,119,033 |
23.85% |
||
RollApp |
19.08.2011 |
600,000 |
- |
- |
- |
- |
- |
600,000 |
10.00% |
||
Wanelo |
21.11.2011 |
5,369,400 |
- |
- |
- |
- |
- |
5,369,400 |
4.73% |
||
Gild |
05.12.2011 |
549,345 |
- |
- |
- |
- |
- |
549,345 |
1.04% |
||
ThusFresh |
26.03.2012 |
379,355 |
- |
- |
- |
- |
- |
379,355 |
3.53% |
||
Backblaze |
24.07.2012 |
6,225,917 |
- |
- |
3,398,360 |
- |
- |
9,624,277 |
15.34% |
||
UM Liquidating Trust |
15.07.2014 |
29,273 |
- |
- |
- |
- |
- |
29,273 |
5.89% |
||
Gentoo LABS |
15.05.2014 |
260,000 |
- |
- |
- |
- |
- |
260,000 |
6.88% |
||
Favim |
24.10.2012 |
305,050 |
- |
- |
- |
- |
- |
305,050 |
20.00% |
||
AppsIndep |
12.11.2012 |
1,863,685 |
- |
- |
- |
(1,397,764) |
- |
465,921 |
19.24% |
||
Virool |
29.08.2012 |
502,275 |
- |
- |
1,311,576 |
- |
- |
1,813,851 |
1.42% |
||
Adinch |
19.02.2013 |
2,400,001 |
- |
- |
- |
- |
- |
2,400,001 |
22.43% |
||
Tracks |
24.11.2011 |
341,350 |
- |
- |
- |
456,179 |
(651,300) |
146,229 |
0.00% |
||
Wrike |
12.06.2012 |
1,991,150 |
- |
- |
2,312,428 |
- |
- |
4,303,578 |
3.68% |
||
Graphicly |
03.04.2013 |
140,000 |
- |
- |
- |
(12,362) |
(127,638) |
- |
0.00% |
||
Oriense |
27.01.2014 |
59,096 |
- |
- |
- |
- |
- |
59,096 |
5.45% |
||
E2C |
15.02.2014 |
136,781 |
- |
- |
- |
- |
- |
136,781 |
5.51% |
||
Drippler |
01.05.2014 |
302,400 |
- |
- |
- |
- |
- |
302,400 |
1.45% |
||
Weaved |
13.06.2014 |
255,000 |
- |
- |
- |
- |
- |
255,000 |
2.44% |
||
Le Tote |
21.07.2014 |
450,360 |
- |
- |
618,518 |
- |
- |
1,068,878 |
1.35% |
||
Anews |
25.08.2014 |
1,000,000 |
- |
- |
- |
- |
- |
1,000,000 |
9.41% |
||
Twtrland |
01.09.2014 |
155,000 |
- |
- |
- |
- |
- |
155,000 |
3.27% |
||
Drupe |
02.09.2014 |
230,000 |
60,750 |
- |
304,392 |
- |
- |
595,142 |
7.47% |
||
Taxify |
15.09.2014 |
328,958 |
- |
- |
- |
- |
- |
328,958 |
2.80% |
||
Pipedrive |
30.07.2012 |
- |
- |
808,206 |
2,347,515 |
189,208 |
(249,490) |
3,095,439 |
4.43% |
||
Quoteroller |
11.07.2014 |
- |
- |
409,912 |
83,596 |
- |
- |
493,508 |
2.17% |
||
VitalFields |
20.12.2013 |
- |
- |
165,420 |
7,834 |
- |
- |
173,254 |
2.23% |
||
Total |
|
31,854,151 |
1,060,745 |
1,383,538 |
18,505,974 |
(2,292,123) |
(1,028,428) |
49,483,857 |
|
|
|
(ii) Convertible loan notes as at 31 December 2015:
Investee company
|
Date of initial investment |
Value at 1 Jan 2015, USD |
Additions to convertible note investments during the period, USD |
Capitalized consulting and legal fees, USD |
Amortized costs, USD |
Internal movements, USD |
Profit on disposal/ Impairment charge, USD |
Disposals, USD |
Value at 31 Dec 2015, USD |
Term, years |
Interest rate, % |
Ninua |
08/06/2011 |
500,000 |
- |
- |
- |
- |
- |
- |
500,000 |
1.5 |
5.00% |
Pipedrive |
30/07/2012 |
775,352 |
33,026 |
- |
(172) |
(808,206) |
- |
- |
- |
- |
|
Sharethis |
26/03/2013 |
571,323 |
- |
- |
(399) |
- |
- |
- |
570,924 |
5.0 |
1.09% |
KitApps |
10/07/2013 |
400,339 |
- |
- |
(292) |
- |
- |
- |
400,047 |
1.0 |
2.00% |
VitalFields |
20/12/2013 |
136,850 |
28,570 |
- |
- |
(165,420) |
- |
- |
- |
- |
|
Gentoo LABS |
21/05/2014 |
100,475 |
- |
- |
(342) |
- |
- |
- |
100,133 |
2.0 |
0.28% |
Whale Path |
02/06/2014 |
203,548 |
- |
- |
(2,493) |
- |
- |
- |
201,055 |
2.0 |
5.00% |
Quoteroller |
11/07/2014 |
403,815 |
7,145 |
- |
(1,048) |
(409,912) |
- |
- |
- |
- |
|
ScentBird |
13.04.2015 |
- |
400,000 |
5,000 |
(1,788) |
- |
- |
- |
403,212 |
2.0 |
4.00% |
Weaved |
05.10.2015 |
- |
27,277 |
- |
- |
- |
- |
- |
27,277 |
1.0 |
7.70% |
Total |
|
3,091,702 |
496,018 |
5,000 |
(6,533) |
(1,383,538) |
- |
- |
2,202,649 |
|
|
11 Trade and other receivables
|
At 31 December 2015 |
|
At 31 December |
|
USD |
|
USD |
Prepayments |
15,174 |
|
6,438 |
Interest receivable on promissory notes |
163,165 |
|
152,528 |
Interest receivable on deposits |
301 |
|
818 |
|
178,640 |
|
159,784 |
12 Cash and cash equivalents
The cash and cash equivalents as at 31 December 2015 include cash on hand and in banks and deposits, net of outstanding bank overdrafts. The effective interest rate at 31 December 2015 was 0.7%.
Cash and cash equivalents comprise the following:
|
At 31 December 2015 |
|
At 31 December |
|
USD |
|
USD |
Deposits |
500,000 |
|
1,000,000 |
Bank balances |
659,789 |
|
1,639,070 |
|
1,159,789 |
|
2,639,070 |
The following table represents an analysis of cash and equivalents by rating agency designation based on Fitch rating or their equivalent:
|
At 31 December 2015 |
|
At 31 December 2014 |
|
USD |
|
USD |
Bank balances |
|
|
|
A rating |
659,789 |
|
1,639,070 |
|
659,789 |
|
1,639,070 |
Deposits |
|
|
|
A rating |
500,000 |
|
1,000,000 |
|
500,000 |
|
1,000,000 |
|
1,159,789 |
|
2,639,070 |
13 Trade and other payables
|
At 31 December 2015 |
|
At 31 December |
|
USD |
|
USD |
Directors' fees payable |
7,471 |
|
23,902 |
Trade payables |
6,992 |
|
34,874 |
Other current liabilities |
92 |
|
623 |
Accrued expenses |
24,822 |
|
- |
|
39,377 |
|
59,399 |
14 Share capital
On 31 December 2015 the Company had an authorised share capital of unlimited shares of no par value and had issued share capital of:
|
At 31 December 2015 |
|
At 31 December 2014 |
|
|
USD |
|
USD |
|
Share capital |
31,453,510 |
|
31,453,510 |
|
|
|
|
|
|
Issued capital comprises: |
Number |
|
Number |
|
Fully paid ordinary shares |
27,744,962 |
|
27,744,962 |
|
|
Number of shares |
|
Share capital, USD |
|
Balance at 31 December 2014 |
27,744,962 |
|
31,453,510 |
|
Issue of shares |
- |
|
- |
|
Share buy-back and cancellation |
- |
|
- |
|
Balance at 31 December 2015 |
27,744,962 |
|
31,453,510 |
There have been no changes to the Company's share capital between the year-end date and the date of approval of these financial statements.
15 Share-based payments
|
For the year ended 31/12/2015 |
|
For the year ended 31/12/2014 |
|
USD |
|
USD |
Share option (compensation expense) |
45,028 |
|
166,282 |
Total share-based payment charge |
45,028 |
|
166,282 |
On 24 October 2012, the Board of Directors approved a share option plan (the "Plan") for directors, officers, employees of or consultants to the Company and/or any company directly or indirectly controlled by the Company.
Under the Plan, options for a total of 7,500,000 ordinary shares in the Company, representing approximately 30% of the then issued share capital (or 23% of the enlarged share capital at the time, assuming full exercise of the options), could be made available at an exercise price determined by the Board or its remuneration committee, which would not be less than the closing middle market price for the Company's share on AIM on the date of grant as published by or on behalf of the London Stock Exchange plc.
Options were to vest on a daily basis over a period of 3 years whilst the option holder remains eligible, and vested options could be exercised on each anniversary of the grant, but if not exercised within 1 year from the allowable date of exercise, would lapse.
The following options, without performance conditions, have been granted under the Plan on 24 October 2012:
Name |
Option Shares |
|
Option Price Year 1 |
|
Option Price Year 2 |
|
Option Price Year 3 |
German Kaplun (Employee) |
1,125,000 |
|
US$1.40 |
|
US$1.55 |
|
US$1.70 |
Alexander Morgulchik (Employee) |
1,125,000 |
|
US$1.40 |
|
US$1.55 |
|
US$1.70 |
Alexander Selegenev (Director) |
1,125,000 |
|
US$1.40 |
|
US$1.55 |
|
US$1.70 |
Artyom Inyutin (Employee) |
1,125,000 |
|
US$1.40 |
|
US$1.55 |
|
US$1.70 |
Yuri Mostovoy (Director) |
562,500 |
|
US$1.40 |
|
US$1.55 |
|
US$1.70 |
Alexander Pak (Employee) |
300,000 |
|
US$1.40 |
|
US$1.55 |
|
US$1.70 |
Levan Kavtaradze (Employee) |
150,000 |
|
US$1.40 |
|
US$1.55 |
|
US$1.70 |
TOTAL |
5,512,500 |
|
|
|
|
|
|
The fair value of services received in return for share options granted is based on the fair value of share options and warrants granted, measured using the Black-Scholes formula, using the following assumptions:
(in USD, except for number of shares and percent) |
|
|
Option Price Year 1 |
|
Option Price Year 2 |
|
Option Price Year 3 |
Number of share options granted |
|
|
1,837,500 |
|
1,837,500 |
|
1,837,500 |
Fair value of share option at date of grant |
|
|
0.25 |
|
0.15 |
|
0.09 |
Share price at date of grant |
|
|
1.65 |
|
1.65 |
|
1.65 |
Exercise price |
|
|
1.40 |
|
1.55 |
|
1.70 |
Expected volatility, per cent |
|
|
9.39% |
|
9.39% |
|
9.39% |
Option life, years |
|
|
0-1 |
|
0-2 |
|
0-3 |
Expected dividends, percent |
|
|
0 |
|
0 |
|
0 |
Risk free interest rate, percent |
|
|
0.41% |
|
0.41% |
|
0.41% |
Expected volatility is estimated from the Company's share price performance on AIM.
|
Number of shares |
|
Weighted average exercise price of share options |
Outstanding share options at 31 December 2014 |
3,675,000 |
|
1.63 |
Options exercised during the year ended 31 December 2015 |
- |
|
0.00 |
Options expired during the year ended 31 December 2015 |
(1,837,500) |
|
1.55 |
Outstanding share options at 31 December 2015 |
1,837,500 |
|
1.70 |
Exercisable share options at 31 December 2015 |
1,837,500 |
|
1.70 |
None of the options that vested in Year 2 under the Plan were exercised, and those options have now lapsed.
16 Reserves
|
Share-based payment reserve USD |
Fair value reserve USD |
Retained losses USD |
Total USD |
Balance as at 1 January 2014 |
695,970 |
7,937,367 |
(3,177,084) |
5,456,253 |
Loss for the year |
- |
- |
(1,561,988) |
(1,561,988) |
Gain from changes in fair value |
- |
2,171,251 |
- |
2,171,251 |
Share-based payment charge |
166,282 |
- |
- |
166,282 |
Transfer on lapse of share options |
(469,593) |
- |
469,593 |
- |
Balance as at 31 December 2014 |
392,659 |
10,108,618 |
(4,269,479) |
6,231,798 |
Loss for the year |
- |
- |
(3,250,752) |
(3,250,752) |
Gain from changes in fair value |
- |
18,505,974 |
- |
18,505,974 |
Share-based payment charge |
45,028 |
- |
- |
45,028 |
Transfer on exercise of share options |
(272,233) |
- |
272,233 |
- |
Balance as at 31 December 2015 |
165,454 |
28,614,592 |
(7,247,998) |
21,532,048 |
17 Capital management
The capital structure of the Company consists of equity share capital, reserves, and retained losses.
The Board's policy is to maintain a strong capital base so as to maintain investor and market confidence and to enable the successful future development of the business.
The Company is not subject to externally imposed capital requirements.
No changes were made to the objectives, policies and process for managing capital during the year.
18 Financial risk management and financial instruments
The Company has identified the following risks arising from its activities and has established policies and procedures to manage these risks. The Company's principal financial assets are cash and cash equivalents, investments in equity shares, and convertible notes receivable.
Credit risk
As at 31 December 2015 the largest exposure to credit risk related to cash and cash equivalents, which was US$1,159,789. The exposure risk is reduced because the counterparties are banks with high credit ratings ("A" Liquidity banks) assigned by international credit rating agencies. The Directors intend to continue to spread the risk by holding the Company's cash reserves in more than one financial institution.
(i) Exposure to credit risk
The carrying amount of the following assets represents the maximum credit exposure. The maximum exposure to credit risk as at 31 December is as follows:
|
At 31 December 2015 |
|
At 31 December 2014 |
|
USD |
|
USD |
Convertible notes receivable |
2,202,649 |
|
3,091,702 |
Trade and other receivables |
178,640 |
|
159,784 |
Cash and cash equivalents |
1,159,789 |
|
2,639,070 |
|
3,541,078 |
|
5,890,556 |
Market risk
The Company's financial assets are classified as available-for-sale and are measured at fair value. The measurement of the Company's investments in equity shares and convertible notes is largely dependent on the underlying trading performance of the investee companies, but the valuation and other items in the financial statements can also be affected by the interest rate and fluctuations in the exchange rate.
Interest rate risk
Changes in interest rates impact primarily cash and cash equivalents by changing either their fair value (fixed rate deposits) or their future cash flows (variable rate deposits). Management does not have a formal policy of determining how much of the Company's exposure should be to fixed or variable rates.
At 31 December 2015 the Company had a cash deposit of US$ 500,000, earning a variable rate of interest. The Board of Directors monitors the interest rates available in the market to ensure that returns are maximized.
Foreign currency risk management
The Company is exposed to foreign currency risks on investments and salary and director remuneration payments that are denominated in a currency other than the functional currency of the Company. The currency giving rise to this risk is primarily GBP, EUR. The exposure to foreign currency risk as at 31 December 2015 was as follows:
|
|
For the year ended 31/12/2015 |
For the year ended 31/12/2015 |
For the year ended 31/12/2014 |
For the year ended 31/12/2014 |
|
|
GBP |
EUR |
GBP |
EUR |
Current assets |
|
|
|
|
|
Cash and cash equivalents |
|
106,694 |
8,468 |
207,618 |
12,026 |
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(31,376) |
- |
(40,022) |
- |
Net (short) long position |
|
75,318 |
8,468 |
167,596 |
12,026 |
Net exposure currency |
|
50,824 |
7,744 |
107,647 |
9,888 |
Net exposure currency (assuming a 10% movement in exchange rates) |
|
67,786 |
7,621 |
150,836 |
10,823 |
Impact on exchange movements in the statement of comprehensive income |
|
7,532 |
847 |
16,760 |
1,203 |
The foreign exchange rates of the USD at 31 December were as follows:
|
31/12/2015 |
|
31/12/2014 |
||
Currency |
|
|
|
|
|
British pounds, £ |
|
|
1.4819 |
|
1.5569 |
Euro, € |
|
|
1.0934 |
|
1.2162 |
Israeli New Shekel, ILS |
|
|
0.2566 |
|
0.2569 |
This analysis assumes that all other variables, in particular interest rates, remain constant.
Liquidity risk management
The Company's approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company.
The Company has low liquidity risk due to maintaining adequate banking facilities, by continuously monitoring actual cash flows and by matching the maturity profiles of financial assets and current liabilities.
As at 31 December 2015, the cash and equivalents of the Company were US$1,159,789.
The following are the maturities of current liabilities as at 31 December 2015:
|
Carrying amount |
|
Within one year |
|
2-5 years |
|
More than 5 years |
|
USD |
|
USD |
|
USD |
|
USD |
Directors' fees payable |
7,471 |
|
7,471 |
|
- |
|
- |
Trade payables |
6,992 |
|
6,992 |
|
- |
|
- |
Other current liabilities |
24,914 |
|
24,914 |
|
- |
|
- |
|
39,377 |
|
39,377 |
|
- |
|
- |
19 Related party transactions
Since May 2012, TMT's Moscow-based staff have been located in an office that belongs to a company ("Orgtekhnika") controlled by Mr. Alexander Morgulchik and Mr. German Kaplun, who collectively own 22.12% of the issued share capital of TMT and are thus considered related parties. There are currently 5 TMT staff involved working substantially full time on TMT's business. TMT started paying rent from 1 October 2012. Rent was being paid to Orgtekhnika at the rate of US$700 per sq meter per year of space utilised. The board believes this represented a discount from the prevailing market rate for similar office space in Moscow at the time. Together with other related expenses (support personnel, company car, security services, etc.), the total costs to TMT were US$14,384 per month (US$172,608 per year). Following the recent negative developments in the Russian economy and Moscow office rental market in particular, starting from 1 February 2015 these office costs have been reduced to US$7,000 per month, and from 1 February 2016 temporarily reduced to zero.
20 Subsequent events
There were no material events subsequent to the end of the reporting period.
21 Control
The Company is not controlled by any one party. Details of significant shareholders are shown in the Directors' Report.